Retirement is one of the biggest life transitions. So, retirement planning is something that should be undertaken by everyone, regardless of the stage you are at, in your career. However, from procrastinating to inefficiently organizing your finances, there are some mistakes that will cost you a lot. Here are some of the biggest mistakes people make when saving for retirement. We want to ensure that you don’t make them.

• Not starting early enough:

You should start planning for your retirement as early as possible. One of the biggest mistakes people make is putting off saving for retirement till the end of their careers. When you are younger, you are more physically capable of working harder and for longer hours to stretch your savings. Here is an example that shows how starting early lets say at the age of 25 with an annual income of Rs 10 lakhs for eg,  instead of age 30 would make a huge difference in the corpus that you build over years If you allocate 10% of your income towards savings from the age of 25, by the time you reach retirement age of 60, your corpus will have an amount of approximately INR 2 crore more than if you had started at 30. This is because of the power of compounding.

• Relying on your provident fund only:

A lot of people make the mistake of believing that the amount they get from their Provident Fund (PF) contributions will be enough to sustain them for the rest of their life. However, most experts put a target corpus for retirement at 20-30 times your annual income, at the time of retirement and your PF alone will not help you build a corpus that will meet that estimate. Not investing enough is a very common mistake that people make. 

• Forgetting to account for inflation:

Prices inflate over time. This means that you will be able to purchase less with a certain amount of cash in the future when compared to the prices now. Therefore you have to adjust the target amount of your corpus to account for inflation between when you start planning and when it is time to retire. The kind of lifestyle you choose to live and the amount of time you estimate you have, after retirement will determine your corpus-based on current prices; this amount is adjusted for the rate of inflation and you will have an idea of the actual corpus you need. So if you calculate an amount of 1 crore for your corpus now, the value will not be the same after 25-30 years. You will have to plan for an inflation-adjusted corpus.

• Not hiring a professional:

Retirement planning is a complex activity and requires a diverse array of investments – including property, annuities or pension schemes, insurance, equity, etc. – to be successful in meeting or even exceeding (if executed well) your required corpus. This is most efficiently carried out by a certified and experienced financial planner or wealth management firm. Choosing not to hire a professional can affect you badly in the long run and cause you unnecessary stress. Working with a professional will also push you to take the risks that you may not have taken on your own, but are necessary to meet your goals.

• Spending too much:

Another obvious but extremely important point is to optimize your spending habits. Spending too much during the early years of your retirement is one of the most prevalent mistakes that people make, and it will affect your corpus detrimentally. 

If you can keep your spending in check and start saving towards your retirement as early as possible with the help of a certified financial planner,  you will be able to amass a corpus that can secure your retirement.